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Rent Reviews: RPI vs Open Market - Business Space Lease Advisory

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Should rent reviews be linked to inflation, specifically the Retail Price Index (RPI), or is it better to let the Open Market decide?


RPI is a measure of inflation published monthly by the Office for National Statistics (ONS). It tracks the changing cost of a fixed basket of goods and services over time and is produced by combining around 180,000 individual prices for over 650 representative items. It is now generally considered that the Consumer Price Index (CPI) offers a more accurate measure of inflation. However, most indexed-linked rent reviews still refer to RPI rather than CPI.

Rent Review provisions in most leases are bench-marked to the open market. However, some are linked to inflation; principally the Retail Price Index (RPI). A landlord may favour RPI at review, because of the associated certainty. This article, however, tests the hypothesis that a RPI-linked rent review can be advantageous for an occupier. It is focused on the industrial and logistics sector.


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Rent Reviews: RPI vs Open Market - Business Space Lease Advisory

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Chris Ridgway

Head of Business Space Lease Advisory

Business Space Lease Advisory

London - West End

I am a Chartered Surveyor and a lease advisory specialist and lead the Business Space Lease Advisory team at Colliers. My team specialises in the industrial, logistics and offices market sectors. We advise investors and occupiers on rent reviews, lease renewals and lease renegotiations. My role is to achieve the best possible value and outcomes for clients in negotiations.

I've worked as a specialist in the lease advisory sector since leaving university in 1995 and I joined Colliers in 1998. I have advised clients on most types of properties across the UK and now specialise in the logistics and offices market sectors in London, East Midlands and the South East.

I advise both occupiers and investors in negotiations and I am regularly appointed as an Expert Witness in dispute resolution cases.



 

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